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The higher the four-firm concentration ratio is, the less competitive the market is. When the four-firm concentration ration is higher than 60, the market can be classified as a tight oligopoly. A loose oligopoly occurs when the four-firm concentration is in the range of 40-60. [21]
Market concentration is affected through various forces, including barriers to entry and existing competition. Market concentration ratios also allows users to more accurately determine the type of market structure they are observing, from a perfect competitive, to a monopolistic, monopoly or oligopolistic market structure.
In particular, the definition of the concentration ratio does not use the market shares of all the firms in the industry and does not account for the distribution of firm size. Also, it does not provide much detail about competitiveness of an industry. [1] The following example exposes the aforementioned shortfalls of the concentration ratio.
Moreover, studies indicate that a concentration ratio of between 40 and 70 percent suggests that the firm operates as an oligopoly. [38] These figures are viable but should be used as a 'rule of thumb' as it is important to consider other market factors when analysing concentration ratios.
N-firm concentration ratio, N-firm concentration ratio is a common measure of market structure. This gives the combined market share of the N largest firms in the market. [ 9 ] For example, if the 5-firm concentration ratio in the United States smart phone industry is about .8, which indicates that the combined market share of the five largest ...
Horizontal concentration: oligopoly or monopoly produced within an area or industry; television (pay or free) is the Brazilian classical model.
“Gatorade is considered an isotonic sports drink, which is similar to blood concentration," she said. "It is effective at delivering glucose to muscles quickly, which is an important energy ...
If the resulting figure is above a certain threshold then economists will consider the market to have a high concentration (e.g. market X's concentration is 0.142 or 14.2%). This threshold is considered to be 0.25 in the U.S., [ 9 ] while the EU prefers to focus on the level of change, for instance that concern is raised if there is a 0.025 ...